Secretary, NSW Ministry of Health v Health Services Union NSW

Industrial Relations Commission (NSW)|2014-12-12|Before: Harrison DP, Honour Walton J, Walton J

Solicitors: Maurice Blackburn Lawyers (Applicant) NSW Ministry of Health (Respondent) Crown Solicitors Office (Respondent) File Number(s): 18070 of 2016

Judgment

The procedural history of this matter is somewhat unusual and convoluted and a summary at the outset is convenient.
The proceedings had their genesis in the filing, on 23 June 2014, of an application by the Health Services Union (HSU or applicant). In Matter No. IRC 515 of 2014 the HSU sought, pursuant to sections 10, 11 and 17 of the Industrial Relations Act 1996 (NSW) (the Act), a new award titled "NSW Health Service Allied Health Assistants (State) Award" or, in the alternative, a variation to the NSW Health Employees State Award.
The matter came before his Honour Walton J, then President of the Industrial Relations Commission (the Commission) for directions on 4 July 2014 at which time his Honour granted liberty to apply if the parties jointly considered conciliation may have utility. That liberty was exercised and his Honour conducted conciliation until November 2014 when it was determined that the matter would proceed to arbitration. Walton J decided to refer the matter to the Full Bench of the Commission.
The matter was listed for a directions hearing before the Full Bench, constituted by Walton J, President, Harrison DP and Newall C, on 12 December 2014. The parties filed, in advance of the hearing, outlines of submissions on programming. The respondent contended that there should be a preliminary hearing as to how the application would meet the requirements of the Industrial Relations (Public Sector Conditions of Employment) Regulation 2014 (the Regulation). The applicant contended the substantive matter should be heard in the normal way, the question of the Regulation to be addressed if, and only if, the applicant made out its case on the merits.

The Application by the HSU

This merits phase of the matter was heard by the Full Bench in September 2015 resulting in a decision published on 28 October 2015 entitled Re NSW Health Service Allied Health Assistants (State) Award [2015] NSWIRComm 30, 255 IR 178 which set out the conclusions the commission intended to make in respect to the issues arising for determination by arbitration in what had come to be described as stage one of the proceedings. In the Statement at [12] the Full Bench identified the issues as follows: [12] The issues arising in the first stage of the proceedings were essentially four fold: (1) Irrespective of the content of any award made, should a separate award be made to regulate the employment of AHAs (noting that existing awards presently cover a substantial proportion of persons employed in that occupation)? (2) Has the HSU succeeded in making out an arbitrated case under principle 8 of the Wage Fixing Principles (see State Wage Case 2010 (No 2) [2011] NSWIRComm 29; (2011) 206 IR 218 and cl 14 of the Wage Fixing Principles established by the State Wage Case 2015 [2015] NSWIRComm 31) and, in particular, has the HSU satisfied the criteria stated in sub-principles 8.2 and 8.4 for an increase in wages (including new classification structures) for the group of employees the subject of the application? (3) Having regard to those principles and the requirements of the Act, and in particular s 10 thereof, should a new classification or classification structure be established for AHAs? (4) If the Commission considered that a new classification structure should be created, what structure should be adopted and what rates of pay should be fixed in that respect?
As to these questions the Full Bench said at [13]-[20] : [13] The answer to these questions (with the possible exception of the first question) must, of course, depend upon the ultimate determination in the matter and, in particular, any arbitration of issues arising under stage two. [14] We have decided to express an early view via this statement as to the above questions in advance of giving detailed reasons in a decision as to stage one of these proceedings. We do so to avoid the significant delay which will arise if further steps in the proceedings are required to await detailed reasons. We are mindful of the fact that, if affirmative answers are given to the first three questions, then further processes will be required in order to reach a conclusion as to the fourth question. In turn, the hearing of stage two of the proceedings will be dependent upon that very quantification process so that proper assessments may be made as to costs (and the related question of cost savings). We also have in minded the limited opportunities for the Full Bench to sit in the disposition of the balance of the matter. [15] This statement, then, sets out the conclusions we intend to reach with respect to questions one to three respectively and some views as to the further progress of proceedings (including steps required for the resolution of the fourth question). [16] The conclusion we have reached with respect to the first question is that a separate award should be made for allied health assistants known as the NSW Health Service Allied Health Assistants (State) Award. Broadly speaking the structure of the award proposed by the HSU appears to be suitable but we express no final view in that respect at this stage. [17] We answer the second question in the affirmative. In particular, we consider there have been changes in the nature of work and level of skill and responsibility required of the persons performing the work of allied health assistants such as satisfying the work value criteria. Changes in qualification requirements and qualifications form an important part of our conclusions in that respect. However, the work value change has been variable in its distribution and impact across the workforce. [18] The HSU has also made out a special case. Our conclusions, in that respect, relate specifically to the process, publication and implementation of the following: the Final Report in the Special Commission of Inquiry into Acute Case Services in NSW Public Hospitals (by Commissioner Garling SC as he then was); the Allied Health Assistance Initiative; and, the Allied Health Assistant Framework (which was released in August 2013 by the New South Wales Ministry of Health). [19] We also answer the third question in the affirmative. The HSU has made out a case to replace the existing classification system for allied health assistants in favour of a new classification system. We consider the alternative proposition advanced by the Secretary is neither an appropriate resolution to the successful application brought by the HSU nor a suitable classification system for allied health assistants under their present working arrangements in the New South Wales Health Service. [20] We do not consider that it is appropriate to answer the fourth question at this time. The resolution of that question would benefit from further conciliation (which both parties have agreed to undertake) and, if conciliation fails, further submissions directed specifically to that question in light of this statement.
As is apparent from the last paragraph quoted from the Statement, the Full Bench expressed no final view as to the structure of the Award, but did provide some broad guidance, at [21] of that decision, before adjourning the matter, as agreed by the parties, for further conciliation.
Conciliation took place under the chairmanship of Harrison DP but was not successful in resolving all outstanding issues. The matter came back before the Full Bench for determination of the remainder of the issues in stage one of the proceedings. That determination was handed down on 27 May 2016; Re NSW Health Service Allied Health Assistants (State) Award [2016] NSWIRComm 6, 260 IR 1.
In that decision the Full Bench noted, at [9], that the parties, through conciliation, reached agreement to increase rates of pay by 2.5 per cent from 1 July 2015. There was also substantial agreement concerning the structure of an award and agreement to add a new classification of "social worker" to the schedule of the award.
However, at [10]-[12], the Bench observed: [10] The parties were unable to reach agreement on the classification structure (including definitions), rates of pay and transitional arrangements. [11] The matter was returned to this Full Bench for determination. [12] This Statement constitutes a resolution of the remainder of the issues in stage one of the proceedings. We shall deal with each such issue below.
It is unnecessary to detail the reasons of the Full Bench for the determinations then made. Those reasons are adequately set out in the decision of 27 May 2016 at [13] - [34]. The Full Bench determined; 1. The new classification structure should be, with one exception, as proposed by the HSU. The exception related to progression to Level 2 and is dealt with at [18] as follows: The HSU proposed that level two be constituted by allied health assistants who possessed the dual attributes of performing duties under indirect supervision and hold the requisite Certificate III qualification. In our view, the duality of that requirement is inappropriate and will unnecessarily disadvantage employees working in rural areas. In the result, we consider that level two entry should be available where employees are engaged under indirect or remote supervision or hold Certificate III qualifications (and in that case may or may not be under direct supervision). 1. Rates of pay for Allied Health Assistants should be: Level 1 Entry: $913.20 Year 1: $ 925.00 Level 2 Year 1: $ 935.00 Year 2: $952.60 Year 3: $965.00 Level 3 Year 1: $995.00 Year 2: $1015.00 Year 3: $1040.00 1. The transitional arrangements were to be as proposed by the HSU
The Commission then issued directions for conciliation, again under the chairmanship of Harrison DP, of stage two of the proceedings which was concerned with the identification of any necessary savings to ensure compliance with s 146C of the Act and the Regulation.
The parties were unable to agree upon any labour related cost savings for the purpose of the negotiation and the matter returned to arbitration. We deal specifically with the issue of employee-related cost savings later in this decision. It is convenient to review some of the evidence led in stage one of the proceedings and adverted to in the decisions of the Full Bench referred to above. The background that evidence provides will facilitate an understanding of how we approach the resolution of the remaining issue.

Stage One - The Evidence

The applicant's evidentiary case began by reference to the "Report of the Special Commission of Inquiry - Acute Care Services in NSW Public Hospitals" prepared by Peter Garling SC ("The Garling Report") which was published on 27 November 2008.
The Garling report makes the following reference to AHAs: "Allied health assistants 9.53 Part of a solution for the lack of allied health professionals may be the expanded use of allied health assistants. 9.54 For a number of years, there have been allied health aides and therapy assistants who have provided assistance to allied health professionals. The Industry Skills Council now offers courses for Certificate IV in Allied Health Assistance and Certificate III in Health Service Assistance (Allied Health Assistance). The Certificate IV course allows for specialisation in particular skills areas, for example physiotherapy and occupational therapy. The Certificate III course provides a more general education with electives offered for particular allied health fields. 9.55 The increased use of such roles to assist allied health staff could assist in providing directed assistance to allied health staff in their duties and may also encourage some of the participants to undertake additional studies to become fully trained professionals. I was told that physiotherapy assistants with a certificate IV provide a greater level of support and are more useful in the clinical setting then the physiotherapist aides who were unqualified. 9.56 Allied health assistants should not be considered a complete alternative to allied health professionals as a means of saving money. 9.60 Allied health assistants must be supervised by allied health professionals and do not have the required level of training or expertise to provide the full range of services of the fully trained allied health professionals. However, such assistants are a readily available and cost effective way to supplement the allied health services being provided." (Emphasis added)
Subsequent to the Garling Report there was a focus by NSW Health (and other jurisdictions) on the use of AHAs, particularly in rural areas. This development was noted in a position paper prepared by Services for Australian Rural and Remote Allied Health ("SARRAH"), a nationally recognised peak body representing allied health professionals. The paper was annexed to the first witness statement of Ayshe Lewis
This paper noted, at page 1 under the Heading "Background", that: "Greater utilisation of an Allied Health Assistant AHA) workforce has been identified by all jurisdictions across Australia as a key component of strategies to support workforce sustainability and improve the health system's capacity to meet the community's health needs into the future."
The paper further noted that: "The AHA workforce is able to support and increase the capacity of the AHP [allied health professional] by undertaking duties that require less technical skills, but generally require an AHA to interact with the patient in the delivery of a management plan. The integration of an AHA workforce with expanded roles and the ability to take on new tasks will enable AHA professionals to focus on more complex service delivery and functions. (Emphasis added) It was also noted that the role of Allied Health Assistant was not new in and of itself however the introduction of formal qualifications at Certificate III and IV levels had a positive effect, stating: "This higher level qualification enables the training and development of more advanced AHAs to conduct therapeutic and program related activities under the direct, indirect or remote supervision of an AHP across a variety of settings and clinical environments. The delegation of less complex tasks by AHPs to Certificate IV qualified ANAs alleviates some of the demand on AHPs while providing an opportunity for improved access and continuity to service of clients." (Emphasis added)
Another key document in the applicant's case was the "Allied Health Assistant Framework" developed by the Ministry and published in August 2013. The document states: Executive Summary The health workforce is experiencing increasing pressures to deliver health services to an evolving population.1 Increased use of an assistant level workforce with new models of care is one strategy to respond to this challenge; this includes developing the Allied Health Assistant (AHA) workforce. This document provides a governance framework for the effective employment and utilisation of AHAs in the NSW health workforce. This Framework will: 1. Clearly define the roles and responsibilities that AHAs have in the delivery of patient care; 2. Provide a structure for AHPs to effectively supervise and delegate to AHAs; 3. Provide information to assist with growing this workforce safely and effectively. This resource document supports the NSW Health AHA initiative, the aims of which include: Expanding the utilisation of AHAs across NSW Health; Enhancing existing models of care to better integrate the assistant workforce; Supporting a team-based approach and better utilisation of the skills within the professional workforce; Development of a robust, rigorous and consistent approach to clinical governance of AHAs. The framework consists of eight components providing guidance when designing roles, employing and working with AHAs as part of the health care team. These eight components are: 1. Scope of practice 2. Skills and competencies' 3. Position description 4. Education pathway 5. Clinical supervision guidelines 6. Delegation guidelines 7. Integrating AHAs into AH teams 8. Professional development Key guidelines within each of the eight components aim to give a clear and consistent direction for health services when employing and working with AHAs. A guide on how to implement this Framework for both new and existing AHA positions is outlined in Chapter 2. The implementation of this state-wide framework will facilitate the safe and consistent expansion of the AHA workforce which will assist in supporting the efficient and timely delivery of allied health services. (Emphasis added)
The framework document also refers to barriers to the introduction of AHAs in the following terms: "Barriers to introduction of AHAs There are some barriers to introducing AHAs in healthcare settings. These include ongoing uncertainty regarding the scope of AHA roles and responsibilities, protectionism of AHPs and feelings of inadequacy by AHAs themselves. Clear role delineation should therefore address the issue of professional status and security, which can lead to adequate and appropriate utilisation of AHA services, and ultimately safe and high quality healthcare."
Ms Robyn Burley, Director of Workforce Planning and Development in the NSW Ministry of Health gave evidence on behalf of the respondent. In her statement she observed that the Framework document was a "Guideline" which was defined as "a policy document that establishes best practice in relation to clinical and non-clinical activities". Being a "guideline" it was not mandatory to comply with it. Ms Burley also said, at [7], it was developed: "in response to identification of challenges in the delivery of health care services including increasing demands with an aging population, the growing burden of chronic disease and an increasing emphasis on the delivery of multidisciplinary care." In cross-examination
The HSU led evidence from Ms Julia Ann Batty, Deputy Physiotherapist in charge of Rehabilitation Services and Senior Physiotherapist at the Spinal Injuries Unit at the Prince of Wales Hospital in Randwick. Clearly Ms Batty is an AHP and we therefore focus on her evidence amongst that led by the HSU because it is least likely to be seen to be self-interested.
Ms Batty provided two statements which became Exhibits 10 and 11. Ms Batty had also given evidence to the Garling Inquiry. Ms. Batty said in her first statement at [24]-[26], that following the Garling Report there was a "push" from within NSW Health for AHAs to gain qualifications. That has permitted the AHAs, as the AHPs work becomes more complex, to take the "lighter duties" from them. She said that patient outcomes had been improved by the AHAs and she and other physiotherapists were free to see more patients.
Ms Batty's evidence provided practical illustrations of the developments of AHAs over several years. The advantages increased markedly following the development of the Certificate III and IV qualifications. For example, in her evidence in chief she said (at transcript pp 51-53 21/9/2015): Q. Then in paragraph 25 on the same page you have given some description of the work that the assistants do in particularly taking lighter duties off yourself as a physiotherapist, do you see that? A. Yes. Q. Am I correct in understanding that you are talking about the qualified physiotherapy assistants that you now have? A. That's right. Q. And at paragraph 26 you then indicate that patient outcomes have been improved by these assistants and by yourself and other physiotherapists to see more patients. I just wanted to ask you if you are able to give us the benefit of your experience in terms of the benefits that your area has at least in having qualified and formally trained Allied Health Assistants? A. The work that we do is now getting more complex and you know it is not cheap to have a whole lot of really high level qualified staff. So a lot of the things that we do don't necessarily need to be done by the physio. There might be repetitive things. The thing about professional staff is that they have to make the decision of what treatment and exactly what has to be done for the patient. It doesn't mean that we have to do all of those treatments, the same thing over and over again. A lot of what patients learn is practice. You need practice of the actual thing. So whether it be just drawing up things to speed up the clinic in a plaster clinic or I have got functional electric stimulation that I do with my spinal cord injury patients and with stroke patients now, and once I have determined that the patient is suitable for the treatment and I have set all of the parameters, the Allied Health Assistants, some of whom might be physios not able to work in the country or they might have a Certificate IV, these people then can take over and they only come and see me if some parameters have changed, patients are unwell, there is something different about what's going on, where they need my input to make a decision on whether to continue what they are doing or not. They didn't have to do that sort of thing when I was a young physio. They would help people walk, they would maybe go and get the crutches for us, they would do those sorts of things and there wasn't as many around either. … Q. Can I ask you this just by way of example, you mentioned in that answer, I think it was functional electrical stimulation for spinal cord injuries. A. Yes. Q. Can you just explain what that involves as briefly as you can? A. Functional electrical stimulation, it's where we apply an electrical current, a very safe one, we have to put pads on patients over muscles, and when you apply the current to the muscles, say I put it on the arm here, it would lift the hand up like this. So we get integrated functional electrical stimulation into tasks. So we can do that … So that's what it does and we are using a lot lot more of it and a lot of stroke patients have it put on their shoulders and things to stop the head of their humerus sort of descending and getting a lot of pain. So we believe in having functional stimulation fairly early and doing a lot of patterned movement will help the patient to retain some sort of recovery. Q. And the qualified Allied Health Assistant that you now have at Prince of Wales, what role do they play in the administration of the functional electrical stimulation therapy? A. There is no way if I am to be an efficient and effective physio that I can sit there doing that all day. I do all the assessment but once I have assessed them and we know it's working and there are no side effects and everything is running good, the Assistant takes over, they run that treatment. They only come to see me again if something has changed and in their opinion it's either not safe to start it or they would prefer to have my opinion first. So they will make the decision of calling me. They have been able to do that. They know enough about it to be able to do that, so they know if there is a medical issue, so they know enough to be able to do that and that's great for them and I can go off and do my other work and I just come when I am needed or to do a new assessment. (Emphasis added) And in cross examination (at p 55); Q. Miss Batty just on that last point, you said nowadays you advertise for a Certificate III or IV and a person with relevant experience to match that? A. Yes. Q. So that person with relevant experience may have been doing the work for some time? A. Yes, they may have, yes. Q. And not have a formal qualification? A. They may not, but less and less we are finding there are not many of them around and there are not many of them applying, because the hospitals did appear to have the big push to try and get people who were even in the system at that time to go ahead and get a Certificate III or IV. As they did with our Allied Health Assistant, they paid us some money to allow us to either back fill or whatever for them to go ahead and train for it. (Emphasis added) And at pp 59-60: Q. That's because a programme might take half an hour and if it was you, you would be sitting there watching it for half an hour? A. That's right, and if you are working in the spinal cord injury area, as an example, we give them about, we like to give them at least one hour face to face every day. We can only see five or six patients a day with everything else we have got to do, and probably five really, because there is so much paperwork to be done and so much assessment to be done and so many meetings to have. So if we didn't have physio assistants, and I know we will have a growing need for physio assistants, they can do a lot of the work where we don't have to be actually there at the time, so run a circuit class, they might have five or six patients in there. They will know what to do and will be able to give them all the correct weights and everything else. Q. How do they know what to do? A. Because they have been taught what to do. So if it's a circuit class, they will have been taught what to do, and they come with various skills from having done the certificates anyway. So they know the sort of language we are speaking. It's not like we, or we don't any more, just grab somebody off the streets and have to teach them. So I can be doing assessments, I can be at a meeting or whatever else I have to do and then the physio assistant can be doing the work in the meantime, so we can see a whole lot more patients by having physio assistants. And we have got one looking after strokes and then we have got another assistant looking after the spinal cord injuries. At p61: They have to do a lot more than that now because we actually need them to be integrated into much more patient care. So we have now got therapy assistants that work in acute rehab, because we need two pairs of hands, and again the pressure on physios to see people who are much more acutely sick nowadays and stay for a shorter length of time, to be able to do that you need somebody else helping you who has got a good skill level that can efficiently utilise your time with the patient. Q. And follow your directions? A. They need to follow my directions, yes, but can also think on their own two feet because they have got to make decisions about whether they need to call me or not. (Emphasis added)
The HSU also led evidence from: Bryan Francis Billington, AHA (Occupational Therapy) at Bathurst Health Service; Eden Kristen Maher, AHA at Wallsend Community Health; Christine Amy Cornish, AHA at Bloomfield Hospital, Orange Health Service; Judith Armstrong AHA at Dubbo Community Health; Michael Gerard Ryan, Dietitian Assistant Orange Health Service (General Hospital); Jane Louise Passer, AHA Bloomfield Hospital, Orange Health Service; Diane Bolger AHA and Stroke AHA at Bathurst Health Service; Joanne Elizabeth Cassidy, Technical assistant (Physiotherapy) at Bathurst Hospital: Jennifer Starr, Dietary Technical Assistant at John Hunter Hospital; Nicola Carroll, Technical Assistant (Physiotherapy) at Dubbo Base Hospital; and Sharon Taylor, AHA at Bloomfield Hospital, Orange Health Service.
Each of these witnesses spoke in varying degrees of the changed nature of their work including increased complexity, reduction in the level of supervision and the impact of formal qualifications. Their evidence was, broadly speaking, consistent with and corroborative of Ms Batty's evidence.
The Ministry led evidence from: as already noted, Ms Burley; Richard Alan Cheney, Allied Health Director in the Western New South Wales Local Health District; Brett Williams, Director Allied Health & General Manager Primary Care & Community Health in the Nepean Blue Mountains Health District; Louise Johnson, Principal Consultant, Workforce Services for South Eastern Sydney Local Health District; Carolyn Synnott, Associate Director, Workplace Relations in the NSW Ministry of Health; and Trevor Craft, Deputy Director, Workplace Relations and Management Branch in the NSW Ministry of Health.
The evidence of Ms Johnson related to the resolution of a different approach to classification of some employees as Technical Assistants while others were classified as Allied Health Assistants in the South Eastern Sydney Local Health District. Ms Synnott and Mr Craft gave evidence relating to the history of industrial regulation of these groups. The Full Bench does not regard that history as posing any impediment to the present application. The evidence of Mr Cheney and Mr Williams was directed to responding to the evidence of the HSU's witnesses.
The Full Bench decision of 27 May 2016 reflects the outcome of the balanced assessment of the evidence. The brief summary of the evidence in stage one, even allowing for some adjustment to take account of the employer evidence, provides the context in which we consider the issue of employee-related cost savings.

Employee-related costs and employee-related cost savings

Employee-related costs

We have found that the HSU has made out a special case. We have found that the changes in the nature of work and level of skill and responsibility required of employees performing the work of AHAs are such as to satisfy the work value criteria. The relevant Award has already been varied to give effect to an increase in wages and allowances of 2.5%. To make award provisions as sought by the HSU giving an increased level of remuneration to reflect the work value changes would necessarily result in increases in remuneration to some employees under the Award, the AHAs, greater than 2.5% in the year that any such award were made.
The issue therefore arises whether, and if so how, those changes in work value can be recognised within the confines of clause 6(1)(a) of the Regulation and specifically, in relation to the obligation created by the Regulation to establish the existence of employee-related cost savings in any case where an increase that might exceed 2.5%, as would be the case here, is to be granted?
We have earlier set out clause 6(1)(b) of the Regulation which permits increases above 2.5% per annum if sufficient "employee-related cost savings" are achieved.
The term "employee-related costs" is defined in clause 8 of the Regulation as follows: (1) For the purposes of this Regulation, employee-related costs are the costs to the employer of the employment of public sector employees, being costs related to the salary, wages, allowances and other remuneration payable to the employees and the superannuation and other personal employment benefits payable to or in respect of the employees.
The restriction on the Commission's award making powers imposed by cl 6(1) of the Regulation was canvassed by the Court of Appeal in Secretary of The Treasury v Public Service Association & Professional Officers' Association Amalgamated Union of NSW (2014) 89 NSWLR 688. Meagher JA said at [65]-[68]: 65 The Regulation was made under s 407 of the Industrial Relations Act 1996 (NSW). Section 146C(1) of that Act requires that when making or varying any award or order, the Commission "give effect to any policy on conditions of employment of public sector employees: (a) that is declared by the Regulations to be an aspect of government policy that is required to be given effect to by the Commission". The validity of that provision was upheld in Public Service Association v Director of Public Employment [2012] HCA 58; 87 ALJR 162. 66 The text of cl 6(1) makes clear that its purpose is to impose a limit on the exercise of the power of the Commission to make or vary an award that increases the remuneration or other conditions of employment of "public sector employees". That limit adopts as its reference point the costs to the employer of employing those employees and those costs are defined as "employee-related costs". They are costs to the employer related to the salary or other remuneration payable to the employee or to benefits, including superannuation, which may be payable to or in respect of the employee. 67 Those costs include costs that are not imposed directly on the employer by an award. The superannuation guarantee shortfall payable to the Commonwealth under s 16 of the Superannuation Guarantee (Administration) Act 1992 (Cth) is an example. The obligation to pay that charge is imposed by statute and the amount payable is calculated by reference to the salary or wage paid to the employee. It follows, all other matters remaining constant, that an increase in that salary or wage will result in an increase in that cost to the employer. 68 Clause 6(1)(a) permits the Commission to award increases in remuneration or other conditions of employment "that do not increase employee-related costs by more than 2.5% per annum". Clause 6(1)(b) permits it to award increases "that increase employee-related costs by more than 2.5% per annum" but only if sufficient "employee-related costs savings" (also a defined term) have been achieved to "fully offset the increased employee-related costs". To decide whether that limit will be exceeded it is necessary to determine the employee-related costs for the annual period before the commencement of the proposed award and the increases in those costs for the following period.
The application of clause 6(1)(a) of the Regulation squarely requires consideration of whether employee-related costs in respect of the relevant employees would be increased by more than 2.5% per annum as a result of the increases awarded by the Commission (together with any new or increased superannuation employment benefits). As wages and allowances under the Award have already been relevantly increased by 2.5%, it is clear that if the increases sought by the HSU, or indeed any increases, to the remuneration of the AHAs are granted, employee-related costs will be increased by more than 2.5%.
We are bound here to observe that it seems clear to us that the assessment that must be made is one of employee-related costs in the year that the award is made. It is not a matter of projecting estimated costs into future years, as the Ministry appeared to submit.
The award sought by the HSU provides for a 12 month term. The Ministry, as we understood it, submitted nonetheless that the Commission is required to attempt to estimate what employee-related costs may arise in subsequent years.
In Secretary of the Treasury v PSA cited above, Bathurst CJ held (at [38]) that application of clause 6(1)(a) of the Regulation requires consideration of whether increases awarded by the Commission would increase employee-related costs by more than 2.5% "for the award period" and (at [40]) that "what is to be taken into account is a comparison of employee-related costs on an annual basis both before and after the award." Later in the judgment, Bathurst CJ said (at [47]): Some reliance was also placed on the fact that the liability to pay the increased superannuation charge percentage commenced on 1 July 2013 whilst the Award was expressed to commence in the first pay period after that date. The reference to "per annum" in the clause demonstrates that the comparison is between annual costs in the year preceding the award and annual costs in the subsequent period. Thus, whilst any calculation of the effect of the increased superannuation charge percentage must take into account the fact that it was in existence for part of the preceding year, it does not mean that it can be entirely ignored.
In this matter, the proposed award provides for a term of 12 months. We agree with the HSU's submission that the Commission is required, in applying clause 6(1)(a) and (b) of the Regulation, to compare annual costs in the year preceding the award and in the year following the commencement of the award. The Commission is not required, or indeed able, to consider whether employee-related costs savings have been demonstrated to offset any alleged additional employee-relate costs beyond the 12 month term of the award.
We further note that the basis upon which it was said by the Ministry that additional costs may arise in subsequent years was that employees may progress through the classification structure. The fact that an employee may progress through a classification structure cannot in our view be held to give rise to an increase in employee-related costs within the meaning of the Regulation.
As we have noted, it is uncontested that if the award sought is made, there will be an increase in employee-related costs. The parties were not significantly apart in estimating the increase in costs following the making of the award. The HSU submitted a figure of $1.39 million. The Ministry submitted $1.499 million. The difference between the two calculations related to an assumption as to the distribution of employees into the three relevant qualification categories of the proposed award. The Ministry assumed that a higher number of employees will progress to the higher levels by reason of having reached achieved a qualification. The HSU's assumption as to distribution was based on the survey done at the time the transitional arrangements were determined. We prefer the approach of the HSU and therefore estimate the cost at $1.39 million.
That leads us to the issue of employee-related cost savings.

Employee-related cost savings

"Employee-related cost savings" are defined in clause 9 in the following terms: (1) For the purposes of this Regulation, employee-related cost savings are savings: (a) that are identified in the award or order of the Commission that relies on those savings, and (b) that involve a significant contribution from public sector employees and generally involve direct changes to a relevant industrial instrument, work practices or other conditions of employment, and (c) that are not existing savings (as defined in subclause (2)), and (d) that are additional to whole of Government savings measures (such as efficiency dividends), and (e) that are not achieved by a reduction in guaranteed minimum conditions of employment below the minimum level. (2) Savings are existing savings if they are identified in a relevant industrial instrument made before the commencement of this Regulation (or in an agreement contemplated by such an industrial instrument) and are relied on by that industrial instrument, whether or not the savings have been achieved and whether or not they were or are achieved during the term of that industrial instrument.
As wage increases of 2.5% have already been awarded, the question becomes, can employee-related cost savings sufficient to permit the wage increases sought, or any wage increases, be demonstrated? And before that question can be answered, there is another before it - how is the Commission to assess the quantum of employee-related cost savings?
The answer to that preliminary question seems to us to lie in what was said in Secretary of the Treasury v PSA cited above: Nor do I think that the construction to which I have referred is affected by the fact that it may be difficult to estimate such increases. The duty of the Commission is to make a finding on the material available to it, something that it is well equipped to do as a specialist tribunal. It is to be noted the Commission will be required to do a somewhat similar exercise in calculating employee-related cost savings. (at [42] per Bathurst CJ)
It seems to us clear that just as the Commission has a duty to estimate - and the use of the word 'estimate' is instructive, standing squarely against the proposition that a completely precise actuarial accounting of these costs is required - the quantum of employee-related costs, the Commission also has a duty to calculate, by estimation, that is doing the best it can as a tribunal with expertise in the field, the employee-related cost savings.
And that must be so on another basis as well. The Regulation cannot, in our view, have been drafted with the intent or effect that the quantification of employee-related costs savings is impossible. Rather, it must contemplate that such an assessment can be made, as it is necessary to do so in order to determine whether or not the regulation itself has been given effect or been breached.
Further, it would be in our view contrary to the Objects of the Act to conclude that, because it may be difficult to establish with absolute mathematical precision the quantum of employee-related cost savings, the effect of the Regulation is that no wage increase could be awarded in a case which warrants them being awarded.
That is the more so as it will almost always be solely within the capacity of the employer to provide data which might allow a determination of the quantum of cost savings to be made. It will be evident that an applicant Union will not possess, nor have access to, the relevant financial records. It cannot be the intended operation of the Act that where a work value case has, as here, been made out, no increase can be awarded because the Commission is not provided with the data that would allow the precise quantum of cost savings to be established on the evidence. Such an approach would permit a respondent employer to frustrate the provisions of the Act and the regulation by declining to produce data, not all of which might exist in compellable form. We do not, in saying this, suggest that that has been the approach of the respondent to these proceedings. As we said in Secretary, NSW Ministry of Health v Health Services Union NSW [2018] NSWIRComm 1007: 43 We observe in that respect that the appellant is in possession of the relevant information to allow the determination of these issues by the Commission if they cannot be agreed. It is true that the respondent can use the coercive powers of the Commission to require the production of that material but we would have an expectation that the appellant, and other public sector employers, would bring that information before the Commission to allow it to comply with its statutory mandates. We considered the costs and delays experienced in this case could have been significantly mitigated if that evidence had been brought before the Commissioner. 44 The issue of onus in award making, as the authorities recognise, differs from that in other forensic proceedings see for example Transport Industry - General Carriers Contract Determination [2016] NSWIRComm 3; 257 IR 294 at [34] - [35]. There is an evidentiary onus on an applicant to establish a case under s 10 of the Act. The onus in relation to the restriction on the operation of s 10 imposed by s 146C is in a different category. We consider even in contested matters such as the present, the onus falls on both the applicant and respondent to assist the Commission to establish the outer limits of employee-related costs having regard to any agreed or determined quantified cost savings available to offset any increase employee-related costs beyond the 2.5% cap. We do not regard that proposition as in any way inconsistent with the decision of the Full Bench in NSW Fire Brigade (Retained Firefighting Staff) Award 2008.
For the Commission to decline to engage in an assessment of the work value because of the difficulties in extracting and analysing the financial and budgetary data would mean that, in this case and cases like it, employees who demonstrably have, as we have found, increased the value of their work, with consequent benefits for the employer and the taxpayer, could not be financially rewarded. That would be inequitable and, as we say, contrary to the Objects of the Act.
A further consideration in this respect which reinforces what we have just said, is the approach to construction identified by the High Court in Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 20, 194 CLR 355. In an often cited passage from the decision of the plurality (McHugh, Gummow, Kirby and Hayne JJ) it was said at [69]-[70]: [69] The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute45. The meaning of the provision must be determined "by reference to the language of the instrument viewed as a whole". In Commissioner for Railways (NSW) v Agalianos, Dixon CJ pointed out that "the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed". Thus, the process of construction must always begin by examining the context of the provision that is being construed. [70] A legislative instrument must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals. Where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions. Reconciling conflicting provisions will often require the court "to determine which is the leading provision and which the subordinate provision, and which must give way to the other". Only by determining the hierarchy of the provisions will it be possible in many cases to give each provision the meaning which best gives effect to its purpose and language while maintaining the unity of the statutory scheme.
The Objects of the Act are set out in s 3. Of particular relevance is s 3(a). It provides: 3 Objects The objects of this Act are as follows: (a) to provide a framework for the conduct of industrial relations that is fair and just,
The approach to the construction and application of cl 6(1) of the Regulation must as far as possible be consistent with the objects of the Act. We do not see how it may be regarded as "fair and just" to allow an employer to require employees to perform work at a higher level, so as to facilitate efficiencies and savings to the employer, and not provide compensation to the employees because of the difficulty of calculating "employee-related cost savings". There can be no doubt that the Objects section of the legislation is the "leading provision". To the extent possible the Commission should strive for a construction of the Regulation which is harmonious with that goal.
Our approach, then is that, as we say above, the Commission has a duty to assess, doing the best it may as a tribunal with expertise in the field, the quantum of any employee-related cost savings pertinent to a given application.
We observe that the Ministry approached the question of what constitutes "employee-related cost savings" on the basis that for an employee-related cost saving to be demonstrated, there must be a direct and calculable reduction in wage costs for the relevant group of employees. For example, Ms Szalay gave the following evidence: Q. All right. Are we right in understanding then that when you use the term "employeerelated cost savings", you mean a reduction in the wage costs of the relevant group of employees? A. Sufficient to fund an increase that you're proposing, yes. Q. Well, leaving aside the sufficiency. What you understand by the term "employeerelated cost saving" when you use it in your statement is a reduction in the wage costs of the particular group of employees concerned? A. Yes.
In our view, that approach misconstrues the Regulation. Nothing in the words of the Regulation has the effect that the cost savings must be shown to be directly in relation to the particular group of employees in relation to which an increase is sought. Further, on the authority of Secretary of the Treasury set out above, we do not agree that a precise dollar sum, identifiable on an accounting basis, is what is required.
Here we are well satisfied that the AHAs make a significant contribution to the efficient operation of the Health Services. On the evidence it is clear that they have increasingly undertaken work of a greater degree of complexity and responsibility, and by doing so have freed employees whose work attracts higher rates of pay to carry out more complex work more effectively. There is real value in that, and there is in our view necessarily a real cost saving in that. Indeed it is a function of the introduction of the Allied Health Framework expressly recognised in the Garling Report.
The requirements for "employee-related cost savings" are those set out in clause 9 of the Regulation, namely, savings that are identified in the award or order, which involve a significant contribution by public sector employees, are not existing savings, are in addition to whole of government savings and are not achieved by a reduction in guaranteed minimum conditions of employment. So long as the requirements in paragraphs (1)(a)-(e) are met, the Regulation does not otherwise limit the type of "savings" which are able to be counted. The Regulation could have, but does not, define "employee-related cost savings" as limited to reductions in employee-related costs. The Regulation does not have that effect.
The breadth of the term "employee-related cost savings" was considered by the Court of Appeal in Secretary of the Treasury v PSA. There, Bathurst CJ held (at [41]): 41 I do not agree that the construction which I have placed on the clause means that cl 6(1)(b) of the Regulation is superfluous. The expression "employee-related cost savings" is defined to cover cost savings which are wider than savings to employee-related costs as defined in cl 8 of the Regulation. In particular, savings resulting from changes in work practices or other conditions of employment, referred to in cl 9(1)(b) of the Regulation, would not fall within the definition of employee-related costs.
That is, the Court of Appeal expressly recognized that "employee-related cost savings" is a broader concept than reductions in wages or even other employment costs, and extends, for example, to savings arising from changes in work practices.
Further, we agree with the HSU submission that the Regulation could not effectively operate if the concept of "employee-related cost savings" was limited in the manner proposed by the Ministry. Essential to the concept and operation of the Regulation is the potential for increases in rates of pay and other conditions of employment to be achieved if offset by other savings: see, for example, Re Health Employees Conditions of Employment (State) Award (2011) 208 IR 201 at [49]. On the Ministry's approach it would in practical terms only be possible for employees to obtain an increase in rates of pay above 2.5% if the amount paid to the same employees were otherwise by some means reduced. That cannot be and is not the effect of the Regulation. It must be said that the approach here adopted by the Ministry appears to be inconsistent with the Government's own policy, the NSW Public Sector Wages Policy 2011. The Policy, consistent with the Regulation, contemplates that increases in rates of pay and other conditions above 2.5% can be awarded if sufficient employee-related cost savings are achieved.
Importantly, the Policy provides examples of employee-related cost savings, including measures which do not involve reductions in wages or direct employment costs. The examples include "changes to rostering arrangements to better reflect customer service", "increases in normal working hours that involve direct customer interaction", "reduction in the days of absence before a medical certificate is required", "requiring a minimum period of leave every 12 months to reduce leave liabilities", "limited access to 'top up' sick leave" and "reduction in the accrual of maximum rostered days off". The second reading speech to the Industrial Relations Amendment (Public Sector Conditions of Employment) Bill 2011 made it clear that the Regulation was intended to implement the Policy.

Employee-related cost savings relevant to this application

The HSU advanced a range of matters said to constitute 'employee-related cost savings' for the purpose of this application. We turn to examine these.

Reduction in Tea Breaks

The first cost savings measure so identified was the reduction in the length of the paid tea breaks currently provided for under clause 3(xiii) of the Health Employees' Conditions of Employment (State) Award. The cost savings associated with reducing the paid tea break from 20 minutes to 10 minutes was calculated to be $709,320.72 per annum. The cost saving from removing the paid break of 20 minutes was calculated to be is $1,418,641.44 per annum.
We are unable to accept the Ministry's submission that no cost savings result from the reduction in the paid tea break. That submission proceeds on the basis of the narrow understanding of employee-related costs discussed above. In our view, in circumstances where employees perform more actual work with no additional wages cost, that is an outcome properly identified as an employee-related cost saving.
We note that the Public Sector Wages Policy 2011 expressly acknowledges that an example of an employee-related cost saving is "increases to normal working hours that involve direct customer interaction". On the evidence, AHAs are employees involved in the direct treatment of patients. An expansion of the working hours of AHAs permits the provision of health care to a greater number of patients at lower cost and accordingly, on a proper understanding of the Regulation, provides employee-related cost savings.
The very general evidence advanced by the Ministry that 'some concerns have been raised' that practical difficulties may arise from the reduction in the length of the paid tea break does not persuade us that an employee-related cost saving is not effected by the reduction in the break, balanced against the evidence brought by the HSU that the majority of AHAs take their paid tea breaks at any self-selected operationally convenient time and only a small number take their tea breaks at present at the same time as a supervising manager or Allied Health Professional. In any event, managing the tea break, whether 10 minutes or 20, is a function of management.

Cash Handling Allowance

The second cost savings measure identified by the HSU is the removal of the cash handling allowance provided for in clause 12(vii) of the Health Employees' Conditions of Employment (State) Award.
It is accepted by the Ministry and the Industrial Relations Secretary that the removal of the money handling allowance would produce an employee-related cost saving. We are prepared to accept, based on the evidence advanced by the HSU, which was based on a contemporaneous survey and which we therefore regarded as more reliable than the general evidence advanced by the Ministry on this point, that the removal of the allowance would provide a cost saving of between $49,000 and $51,000. We accept, of course, that these amounts are relatively small in relation to the cost of the rates of pay proposed by the HSU. Nevertheless, they go toward the overall package of employee-related cost savings.

Reduced Length of Stay and Readmission Rates

The third cost savings measure identified by the HSU was that the changes to work practices affecting AHAs have had a demonstrated effect in reducing length of stay and reducing rates of readmission.
It is important to note that the underlying premise of the Allied Health Assistants Framework was that the increased utilisation of AHAs, and particularly the expansion in their scope of duties into areas requiring increased skills and competencies, would lead to improved patient outcomes and more cost effective treatment of patients within the hospital system.
As an example, the Framework noted: Evidence from the literature highlights health care benefits from introducing AHAs in terms of both process and service outcomes. These include increased patient satisfaction, increased intensity of clinical care, more time for AHPs to concentrate on complex tasks and improved clinical outcomes. Introduction of AHAs in the workplace has also led to improved levels of client satisfaction and are a cost effective addition to the allied health workforce.
The Ministry did not contend that this objective of the Framework had not been realised. On the evidence, as illustrated above, AHAs have expanded the scope and degree of the work they perform. On the evidence, that has freed AHPs to address more complex clinical tasks. Savings which flow from that are directly related to changes in the way employees perform work.
Evidence led by the HSU went to examples of employee-related cost savings based on a reduction in the average length of stay due in part or in whole to the work of AHAs, including the introduction of the role of a Dietician Assistant in the Western NSW Local Health District and a project styled the "Allied Health Assistant Project - Developing a cross disciplinary model of care for Allied Health Assistants working for CCLHD - 2015" implemented in the Central Coast Local Health District. These projects are, it is clear, indicative examples of the type of initiatives required, intended or encouraged to be implemented, as best practice, across the public health system under the Framework and the NSW Health Workforce Plan 2012-2022. It can be expected that they will continue to be rolled out.
The CCLHD Allied Health Assistant Project demonstrates that health services regard, unsurprisingly, reductions in length of patient stay as a cost saving capable of being utilised to offset wage costs. One aspect of the project was the provision of a weekend service staffed by AHAs without direct supervision by an AHP. The report concluded that: This cost effectiveness study showed that there was a significant cost savings for a minimally clinical important difference in outcomes. The cost savings was predominantly related to decreasing the length of stay of patients and resulted in a mean savings of $1673AUD per patient. The additional cost of employing therapists for the additional day at an increase rate, due to penalty rates, was offset by the decrease in the length of stay.
Indeed Mr Davison, giving evidence for the Ministry, accepted that reduced length of stays produced cost savings capable of offsetting wage costs.
It seems to us entirely clear that a reduction in length of stay for patients reduces costs to the health system of the treatment of those patients and patients overall. It is a saving of this nature which, adopting the approach identified in Secretary of the Treasury v PSA cited above, properly forms the basis for the Commission, as a tribunal with specific expertise in the field, to do the best it can to come to a view of costs and of savings in addressing a particular application.
The Ministry advanced evidence that the cost per bed per day within the hospital system was $1,428 in the 2014/2015 financial year, the last year for which data is available.
Ms Smith's evidence included data which indicate that the average patient length of stay reduced from 5.55 days in 2012/13 to 5.42 days in the 2014/2015 financial year. The HSU submitted, and it seems to us correct, that that reduction in length of stay has produced savings referable to a need to provide 0.13 fewer days' care per patient. Based on a cost per bed per day of $1,428, this represents a saving of $185.64 per patient.
That figure is only useful, of course, measured against the number of patients treated. Table 2.5 of the publication titled 'Admitted patient care 2014-2015' published by the Australian Institute of Health and Welfare sets out that in 2014/2015 there were 978,234 public acute hospital patients who were admitted for overnight stays.
Based on a total patient pool of 978,234 patients who required overnight care in the 2014/2015 financial year, a reduction in the average length of stay by 0.13 days (equating to a reduced expenditure of $185.64 per patient), represents a total saving to the system of $181.5m for the 2014/2015 financial year.
Of course, the increased utilisation of AHAs has by no means provided all of that reduction in lengths of patient stay. But on the evidence it is uncontroverted that it has contributed to it. In that context it must be noted that the total employee-related cost savings which are required to be identified to grant the HSU's claim in these proceedings, even based on the Ministry's data, equates to less than 1% of the cost saving achieved through the reduced length of stay to which the AHAs have contributed.
Again, adopting the approach in Secretary of the Treasury v PSA, the Commission, applying its specialist expertise and long experience in these matters, is satisfied that savings arising from changes to the work practices of AHAs are more, and in our view significantly more, than enough to offset the costs of the increases in rates of pay in the HSU's proposed award.

Provision of the Same Services at a Lower Wage Cost

There is another aspect to the development of wider and higher-level work practices by the AHAs, and it is this that we regard as most significant in the consideration of employee-related cost savings. That is, that the changes to the AHAs' work practices have permitted the same services to be provided at a lower wage cost through the increased utilisation of AHAs to carry out more complex clinical tasks. Again, as the HSU, correctly in our view, submitted, the premise underpinning the Framework is that the increased utilisation of AHAs is to provide a "cost effective addition to the allied health workforce" and to permit more highly paid AHPs to be reallocated to perform higher level duties requiring their professional skills and qualifications.
The current wages paid to AHAs, expressed as a weekly wage rate, ranges from $936.00 per week to $1,069.60 per week, with the average weekly wage being $966.47. The current wages paid to AHPs, expressed as a weekly wage rate, ranges from $1,143.78 per week to $2,930.71 per week.
That quite significant difference between the wages paid to AHAs and those paid to AHPs means that tasks performed by an AHA rather than an AHP will directly result in a cost saving (as was anticipated by the Garling Report and the Allied Health Framework). That will be markedly so even if the award sought were granted.
While it is difficult to quantify with precision the savings achieved by AHAs performing work in lieu of AHPs, because data on the frequency and extent of that circumstance was not able to be produced by the Ministry, on the uncontroverted evidence the practice of APAs performing tasks in lieu of AHPs is widespread, increasing, and is, for good reason, encouraged by the Health Services.
The evidence does disclose that there are 641 full-time equivalent AHAs. It also discloses that the difference between the average weekly wage of an AHA and that of an AHP is $177.31 per week or $9,251.78 per annum. If one were to project that all tasks performed by APAs are tasks which would otherwise have been performed by the lowest paid AHP's, there would be an annual saving in wages of $5.9m.
Of course the totality of that assumption is inconsistent with the evidence and therefore unlikely to be wholly or even largely correct, but it should be noted that if only 23.4% of the saving projected above were to be achieved - that is, if 23.4% of APAs' work overall consists of tasks which would otherwise have been performed by an AHP, this would provide the whole employee-related cost saving required in this claim, that is, $1,390,504. On the evidence, we think it very likely that APAs do perform that degree of work which would otherwise have to be performed by AHPs. We say again, we are not of the view that such a precise mathematical correlation is required, nor that employee-related cost savings can only be identified in that manner, but this computation does provide a basis on which the provisions of the Regulation can be readily satisfied.

Other Submissions of the Industrial Relations Secretary

We deal, for completeness, with certain other submissions advanced by the Industrial Relations Secretary going to the nature of "employee-related cost savings" for the purposes of the Regulation.
Firstly, the Secretary submits that "employee-related cost savings" must now be savings achieved after 24 June 2014. This coincides with the date of the commencement of the Industrial Relations (Public Sector Conditions of Employment) Regulation 2014.
We do not agree. There is authority that the intention of s 146C of the Act and the initial Regulation was directed at savings achieved after the commencement of the regime, in 2011. In HSU east v Director-General, Department of Finance and Services [2012] NSWIRComm 112, the Full Bench concluded (at [55]): Our view is that s 146C of the IR Act and the Regulation, when the scheme is read as a whole, operate in respect of cost savings achieved after 20 June 2011. Employee-related cost savings of the kind contemplated by the Regulation would not be achieved if increases for salaries after 20 June 2011 could be offset by employee-related cost savings prior to 20 June 2011.
The reasoning of the Full Bench was based upon the "scheme read as a whole", that is, the commencement of s 146C and the promulgation of a regulation. Nothing in the text or context of the Regulation made in 2014 suggests that it was intended to reset the whole scheme. The 2014 Regulation was enacted not as a regulation at all, but as Schedule 5.2 of the State Revenue and Other Legislation Amendment (Budget Measures) Act 2014. Following a number of attempts to amend the 2011 Regulation which were disallowed, the new Regulation was enacted by legislation in identical form to the 2011 Regulation other than the insertion of references to superannuation in clause 6(1)(a) and 8 designed to overturn effect of the Full Bench decision in Re Crown Employees Wages Staff (Rates of Pay) Award 2011 [2013] NSWIRComm 53.
Secondly, the Secretary submits that any cost savings achieved in previous years cannot be used to provide for an increase beyond 2.5% because the Commission is required only to compare costs in 2016/2017 to 2017/2018. That submission appears to rest on what we regard as a misreading of the decision of the Court of Appeal in Secretary of the Treasury v PSA cited above. There, the Court of Appeal was addressing the application of clause 6(1)(a) of the Regulation, that is, how to calculate whether an award would increase employee-related costs by more than 2.5% per annum. Bathurst CJ determined that, in assessing the increase in costs, it was necessary to compare the 12 month period prior to the commencement of the award with the subsequent period. The Court of Appeal was not addressing cost savings and did not find that only savings realised in the same 12 month period were capable of being taken into account.
A similar error, in our view, attends the Secretary's submission drawing on the decision of the Full Bench in HSU east. In that decision, the Full Bench found that the union was not entitled to rely upon savings achieved prior to the commencement of the scheme as a whole, but did not suggest that the subsequent savings could only be taken into account in the same year they are realised. Indeed, the reasoning is inconsistent with that conclusion. Furthermore, the approach proposed by the Secretary is not consistent with the underlying rationale of s 146C and the Regulation. In Re Health Employees Conditions of Employment (State) Award (2011) 208 IR 201, for example, the Full Bench observed (at [51]): The remaining provisions of cl 6 are mechanisms to ensure adherence to the primary policy. Government policy has committed itself to making available a 2.5 per cent increase in salaries each year for public sector employees: it can matter naught to the Government nor its policy when an arbitration is conducted for higher rates than the 2.5 per cent base allowable each year. This is because the employees themselves, by means of cost offsets equal to the increases that may be granted, must pay for any increases over 2.5 per cent. The policy operates in such a manner that it matters little, if anything, to the Government and its requirement for fiscal restraint in public sector wages, whether small or very large additional increases are granted, as all such increases shall be paid for by the employee.
So long as the overall objective of having any increase in employee-related costs above 2.5% offset by savings, it can matter not whether the savings are achieved in the same year as the additional costs are incurred.
Furthermore, clause 9(2) of the Regulation contains a definition of "existing savings": Savings are existing savings if they are identified in a relevant industrial instrument made before the commencement of this Regulation (or in an agreement contemplated by such an industrial instrument) and are relied on by that industrial instrument, whether or not the savings have been achieved and whether or not they were or are achieved during the term of that industrial instrument. "Existing savings" are excluded from the definition of "employee-related cost savings" only if identified in an industrial instrument prior to the commencement of the Regulation and relied upon in that industrial instrument. The exclusion of "existing savings" would be otiose if the Commission were limited to considering savings realised in the same 12 month period.

Conclusion

In our view, the Work Value principle and the Objects of the Act point squarely to the making of an Award which provides wage increases, and an expanded classification structure, to Allied Health Assistants. We are comfortably satisfied that on the evidence, employee-related cost savings within the meaning of the Regulation, permitting the increases provided by the Award, can be established. It follows that we propose to make an Award in the terms agreed by the parties and contained in the Applicant's Further Amended Draft Award attached as MS 1 to Exhibit 61. The award will be operative from the date of this decision.
We direct the parties to discuss the variations necessary to the Health Employees' Conditions of Employment (State) Award to give effect to the cost savings identified in [77] and [82] above. We direct the applicant to prepare and file the necessary applications within 21 days of the publication of this decision.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 19 April 2018

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